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Medvedev, Merkel talks to focus on trade, Georgian crisis

German Chancellor Angela Merkel meets Russian President Dmitri Medvedev on Thursday in St.Petersburg. Medvedev is expected to push for stronger ties with Germany and is also expected to discuss the "North Stream" gas pipeline project.

ST PETERSBURG - President Dmitry Medvedev hosts German Chancellor Angela Merkel on Thursday to try to resume "business as usual" with Russia's leading European partner after the August war in Georgia.

"The meeting is aimed at confirming the stability and maturity of the Russian-Georgian partnership free from political fluctuations," a Kremlin source told reporters ahead of a series of meetings in Medvedev's home city of St Petersburg.

Germany is Russia's biggest single trading partner with bilateral turnover expected to reach $60 billion this year. But ties were badly shaken in August when Russia sent troops into Georgia drawing unanimous condemnation from the West.

Merkel has joined the chorus of Western critics who said the Georgia war, launched to crush Tbilisi's attempt to retake a separatist province of South Ossetia, had made "business as usual" impossible with Moscow and that ties should be reviewed.

But she has backed a deal mediated by French President Nicolas Sarkozy, under which Russia agreed to pull out of undisputed Georgian territories by Oct. 10 after the European Union deploys monitors in the Caucasus state.

Medvedev said on Wednesday that Russia would carry out its promise on time. Top EU officials have said Moscow's readiness to adhere to the Sarkozy plan had helped to restart talks on Russia-EU cooperation pact.

Russia views the talks during the "St Petersburg Dialogue" -- an annual forum of officials and businessmen from the two countries -- as a good opportunity to mend ties.

"The leaders ... will hold an open exchange of opinions on the ways to restore solid peace and stability in the region, undermined by the Georgian aggression," the Kremlin source said referring to Russia's interpretation of the Georgi conflict.

Moscow says it had to send troops to Georgia to avoid bloodshed in the region where it has carried out a peacekeeping mission since the early 1990s.

Russia is striving to show that the Western condemnation of the Georgia war has not led to Russia's isolation in Europe. Last month Prime Minister Vladimir Putin and his French counterpart Francois Fillon held an inter-government commission in the Black Sea resort of Sochi.

The Kremlin source said Medvedev intends to focus at talks with Merkel on developing further political and economic ties, including the most ambitious project "North Stream" -- a gas pipeline to deliver Siberian gas to Europe under the Baltic Sea.

Russia and Germany say "North Stream" will boost gas supplies to Europe and make it less dependent on potential problems with transit states like Ukraine.

But some European governments, including Poland, say the project will deepen Europe's reliance on Russian energy supplies contradicting the EU policy of divercifying energy sources. Critics also say the project could be an environment threat.

"The sides are planning to discuss a political support to the plan of building on time the trans-border gas transit system "North Stream", aimed at strengthening the guarantees of Europe's long-term energy supplies," the Kremlin source said.